📌 Key Insight: HUF cannot earn salary, but can earn almost all other heads of income.
3️⃣ Basic Exemptions & Deductions
Benefit
Individual
HUF
Basic exemption limit
✔ Yes
✔ Yes (separate)
Section 80C
✔ Yes
✔ Yes
Section 80D (medical)
✔ Yes
✔ Yes (conditions differ)
Capital gain exemptions
✔ Yes
✔ Yes
Section 87A rebate
✔ Yes (resident individual)
❌ Not available
📌 Important: Rebates & reliefs worded for “individual” do not extend to HUF.
4️⃣ Tax Planning Scope (Practical)
Area
Individual
HUF
Threshold splitting
❌
✔ Possible
Separate capital gains limits
❌
✔ Possible
Rental income planning
Limited
✔ Effective
Investment diversification
Limited
✔ Separate portfolio
Clubbing exposure
Medium
High if misused
5️⃣ Risk & Scrutiny Lens
Aspect
Individual
HUF
Source of funds scrutiny
Moderate
High
Clubbing provisions
Limited
Critical risk area
Documentation sensitivity
Medium
Very high
Departmental scepticism
Normal
Elevated
🧠 FININ2MIN TAKEAWAY
Truth
Why It Matters
HUF ≠ tax shortcut
Source decides outcome
Clubbing kills bad planning
Paper structures fail
Loans > transfers
Cleaner defence
Separate books & bank
Non-negotiable
Law follows substance
Not labels
⚠️ Disclaimer
This content is for general information and educational purposes only and does not constitute tax or legal advice. Laws and interpretations may change. Please consult a professional advisor before taking action.
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